Correlation Between VAT Group and Emmi AG

Can any of the company-specific risk be diversified away by investing in both VAT Group and Emmi AG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining VAT Group and Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VAT Group AG and Emmi AG, you can compare the effects of market volatilities on VAT Group and Emmi AG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in VAT Group with a short position of Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of VAT Group and Emmi AG.

Diversification Opportunities for VAT Group and Emmi AG

0.2

Correlation Coefficient

VAT Group  Emmi AG

Modest diversification

The 3 months correlation between VAT and Emmi is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding VAT Group AG and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi AG and VAT Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on VAT Group AG are associated (or correlated) with Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of VAT Group i.e., VAT Group and Emmi AG go up and down completely randomly.

Pair Corralation between VAT Group and Emmi AG

Assuming the 90 days trading horizon VAT Group is expected to generate 4.91 times less return on investment than Emmi AG. In addition to that, VAT Group is 2.06 times more volatile than Emmi AG. It trades about 0.02 of its total potential returns per unit of risk. Emmi AG is currently generating about 0.16 per unit of volatility. If you would invest  73,400  in Emmi AG on December 21, 2024 and sell it today you would earn a total of  7,600  from holding Emmi AG or generate 10.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

VAT Group AG  vs.  Emmi AG

VAT Group AG

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VAT Group AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, VAT Group is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Emmi AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emmi AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Emmi AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VAT Group and Emmi AG

The main advantage of trading using opposite VAT Group and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VAT Group position performs unexpectedly, Emmi AG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Emmi AG will offset losses from the drop in Emmi AG's long position.

The idea behind VAT Group AG and Emmi AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.